BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1290
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          Date of Hearing:   June 27, 2012

                           ASSEMBLY COMMITTEE ON EDUCATION
                                Julia Brownley, Chair
                    SB 1290 (Alquist) - As Amended:  June 20, 2012

           SENATE VOTE  :   24-14
           
          SUBJECT  :   Charter schools: establishment, renewal, and 
          revocation.

           SUMMARY  :  Requires the authority that granted a charter school 
          to consider increases in pupil academic achievement for all 
          groups of pupils served by the charter school as the most 
          important factor in determining whether to grant a charter 
          renewal or whether to revoke a charter school; and, requires a 
          charter school to achieve its Academic Performance Index (API) 
          growth target for schoowide and numerically significant pupil 
          subgroups for renewal, as specified.  Specifically,  this bill  :   


          1)Specifies, for both school district authorized and county 
            board of education authorized charter schools, that the 
            measurable pupil outcomes identified in a charter school 
            petition shall include outcomes that address increases in 
            pupil academic achievement both schoolwide and for all groups 
            of pupils served by the charter school.

          2)Requires the authority that granted the charter school to 
            consider increases in pupil academic achievement for all 
            groups of pupils served by the charter school as the most 
            important factor in determining whether to grant a charter 
            renewal.

          3)Defines "all groups of pupils served by the charter school" as 
            a numerically significant pupil subgroup served by the charter 
            school.

          4)Changes one of the existing academic achievement requirements 
            for renewal by specifying that a charter school must attain 
            its API growth target in the prior year or in two of the last 
            three years both schoolwide and for all groups of pupils 
            served by the charter school. 

          5)Requires the authority that granted a charter school to 








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            consider increases in pupil academic achievement for all 
            groups of pupils served by the charter school as the most 
            important factor in determining whether to revoke a charter.

           EXISTING LAW  :  

          1)Establishes the Charter Schools Act of 1992 which authorizes a 
            school district, a county board of education or the state 
            board of education (SBE) to approve or deny a petition for a 
            charter school to operate independently from the existing 
            school district structure as a method of accomplishing, among 
            other things, improved student learning, increased learning 
            opportunities for all students, with special emphasis on 
            expanded learning experiences for students who are identified 
            as academically low achieving, holding charter schools 
            accountable for meeting measurable student outcomes, and 
            providing the schools with a method to change from rule-based 
            to performance-based accountability systems.

          2)Authorizes a charter school to be granted for not more than 
            five years, and to be granted one or more renewals for five 
            years.  Requires the renewals and material revisions of the 
            charter to be based upon the same standards as the original 
            charter petition.

          3)Requires, commencing on January 1, 2005, or after a charter 
            school has been in operation for four years, whichever date 
            occurs later, a charter school shall meet at least one of the 
            following criteria prior to receiving a charter renewal:
             a)   Attained its Academic Performance Index (API) growth 
               target in the prior year or in two of the last three years, 
               or in the aggregate for the prior three years.
             b)   Ranked in deciles 4 to 10, inclusive, on the API in the 
               prior year or in two of the last three years.
             c)   Ranked in deciles 4 to 10, inclusive, on the API for a 
               demographically comparable school in the prior year or in 
               two of the last three years.
             d)   The entity that granted the charter determines that the 
               academic performance of the charter school is at least 
               equal to the academic performance of the public schools 
               that the charter school pupils would otherwise have been 
               required to attend, as well as the academic performance of 
               the schools in the school district in which the charter 
               school is located, taking into account the composition of 
               the pupil population that is served at the charter school.








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             e)   Has qualified for an alternative accountability system 
               pursuant to subdivision (h) of Section 52052

           FISCAL EFFECT  :   According to the Senate Appropriations 
          Committee, potentially significant local costs to require 
          charter authorizers (most of which are schools districts) to 
          change the way they evaluate renewals, and state costs for 
          state-authorized charter schools. These requirements could 
          constitute a reimbursable mandate because the school districts 
          that have authorized charter schools do not have a choice in 
          having to review a charter renewal, even though the charter was 
          granted before this bill's new restrictions were in effect. 
          Thus, imposing new procedures on that required renewal process 
          could be determined to be a state mandate on school districts.  
          In the event that no changes are made to charter approval, 
          renewal, and revocation statutes, the state risks losing up to 
          $290 million in federal funding is has already been granted.

           COMMENTS  :    Charter School Background  :  According to the 
          California Department of Education (CDE), there are currently 
          983 charter schools operating with student enrollment from 
          2010-11 of more than 369,000 in the state.  This includes three 
          statewide benefit charters and 18 State Board of Education 
          (SBE)-approved charters.  Some charter schools are new, while 
          others are conversions from existing public schools.  Charter 
          schools are part of the state's public education system and are 
          funded by public dollars.  A charter school is usually created 
          or organized by a group of teachers, parents and community 
          leaders, a community-based organization, or an education 
          management organization.  Charter schools are authorized by 
          school district boards, county boards of education or the state 
          board of education.  A charter school is generally exempt from 
          most laws governing school districts, except where specifically 
          noted in the law.  

          According to the author, in October 2010, the California 
          Department of Education (CDE) was informed by the federal 
          Department of Education (DOE) that California's public charter 
          school petition authorization, renewal and revocation laws were 
          inadequate and therefore out of compliance with the Public 
          Charter School Grant (PCSG) Program.  The PCSG Program provides 
          grants of up to $575,000 to plan and implement new charter 
          schools. Its funding is integral to the successful development 
          of successful and high quality public charter schools.  
          Specifically, the DOE informed the CDE that the state is 








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          partially out of compliance with Assurance 3A and completely out 
          of compliance with Assurance 3B in the PCSG application because 
          increases in pupil academic achievement in all groups of pupils 
          as described in Section 1111(b)(2)(C)(v) of the Elementary and 
          Secondary Education Act (ESEA) is not the "primary 
          consideration" in the approval, renewal, and revocation of 
          California charter schools.

          Assurance (3)(A) requires that (1) each charter school in the 
          State operate under a legally binding charter or performance 
          contract between itself and the school's authorized public 
          chartering agency, (2) charter schools conduct annual, timely, 
          and independent audits of the school's financial statements that 
          are filed with the school's authorized public chartering agency, 
          and (3) each charter school be required to demonstrate improved 
          student achievement for all students.  Assurance 3(B) requires 
          that authorized public chartering agencies use increases in 
          student academic achievement for all groups of students 
          described in Elementary and Secondary Education Act (ESEA) 
          Section 1111(b)(2)(C)(v) as the most important factor when 
          determining to renew or revoke a school's charter.  In an effort 
          to resolve these areas of noncompliance through administrative 
          means, the CDE engaged in a number of conversations, 
          correspondence and meetings throughout the 2010-11 fiscal year 
          to explain how current state statutes and regulations regarding 
          charter authorization, renewal, and revocation pertained to and 
          complied with the federal assurances. 

          However, in the August 11, 2011 PCSG Award Letter, the DOE made 
          it clear that the state is out of compliance with the last of 
          the three factors listed in assurance 3(A) and the entirety of 
          assurance 3(B). The DOE further explained that California is out 
          of compliance because there is no explicit statutory or 
          regulatory requirement that (1) each and every charter school 
          demonstrate improved student academic achievement or (2) 
          increases in academic achievement for all pupils be the primary 
          factor in a renewal decisions (Assurance 3(B)). In addition, the 
          DOE noted that California's revocation regulations apply only to 
          charter schools in the lowest deciles and not all charter 
          schools. Therefore, the DOE determined that the CDE is not in 
          compliance with assurance 3(B).

          After exhausting efforts to resolve this matter 
          administratively, the CDE determined that legislative action was 
          the only option available to address the identified areas of 








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          noncompliance in order to not jeopardize or put further at risk 
          the $290 million it is scheduled to receive during the 2010-15 
          PCSG Program cycle. On September 1, 2011, the CDE sent a letter 
          to the DOE committing to pursue legislation during the 2012 
          legislative year to resolve these areas of noncompliance. By 
          passing this measure, the state can ensure that California will 
          not put at risk or jeopardize much needed funding to support the 
          establishment of high quality, high performing charter school 
          operations for California students and their families. 

           Policy or Technical Change  ?  While this bill makes changes to 
          charter school renewal and revocation policies to align the 
          state's statutes with the Federal requirements of the PCSG 
          program, these changes are not technical.   While the policy 
          changes are not sweeping, they are also not unsubstantial.  This 
          bill specifies that a charter authorizer must consider increases 
          in pupil academic achievement for all groups of pupils served by 
          the school, as measured by the API, "as the most important 
          factor" for renewal and revocation.  This does not mean the 
          charter school is automatically not renewed or revoked, but it 
          does mean that the charter authority must consider this 
          information as the most important factor in making its decision. 
           In other words, the charter authority must give extra weight to 
          this factor when it considers all the factors for renewal or 
          revocation.  Further the bill changes one of the academic 
          requirements for renewal by requiring a charter school to attain 
          its API growth target in the prior year or in two of the last 
          three years both schoolwide and for all groups of pupils served 
          by the charter school.  Currently, charters must meet at least 
          one of five measures in order to be renewed by their authorizer. 
           This bill changes one of those measures.  This change will make 
          it more difficult for charter schools, that are struggling 
          academically, to be renewed. 

           Will this result in more charter school non-renewals and 
          revocations  ?  Some number of charter schools (roughly estimated 
          around 60 schools) will no longer meet any of the five academic 
          criteria for renewal, due to the change in the API criteria.  
          Because these schools will not meet the academic criteria for 
          renewal, they will be in jeopardy of not being renewed.  

           Arguments in Support  :  State Superintendent of Public 
          Instruction Tom Torlakson supports the bill and states, "This 
          bill would bring the California Education Code (EC) into 
          compliance with the federal Public Charter Schools Grant Program 








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          which provides $290 million in funding during the grant cycle.  
          Specifically, this bill would amend EC sections 47605, 47605.6, 
          and 47607 to make increases in academic achievement for pupils 
          in all numerically significant subgroups, the most important 
          factor when considering approval, renewal or revocation of a 
          public charter school petition."

           Arguments in Opposition  :  K-12, Inc. and Charter School Capital 
          oppose the bill and state, we believe that the changes necessary 
          to conform to the United States Department of Education are best 
          attained through the State Board of Education going through the 
          process of drafting regulations, which they are currently doing, 
          and not by rushing a bill through the legislature.  This bill 
          does not allow charter schools any chance to have input into the 
          discussion and places unrealistic expectation on every charter 
          school in the state.  Additionally, there are no guarantees that 
          this measure will put California in conformity with the 
          Department's regulations because they have not weighed in on 
          their effect yet.

           Previous & Related Legislation  : AB 440 (Brownley) from 2011, 
          which is on the Senate Floor Inactive file, establishes academic 
          and fiscal accountability standards related to charter schools.  


          SB 645 (Simitian) from 2011, which was held in the Assembly 
          Appropriations Committee, would have authorized the Charter 
          School Financing Authority (CSFA) to refinance working capital 
          for charter schools; and, would have established new 
          accountability measures for charter school renewal and expands 
          eligibility of the Charter School Facility Grant Program 
          (CSFGP).  

          AB 1950 (Brownley) from 2010, would have established new 
          academic and fiscal accountability standards for charter 
          schools. This measure was held in the Senate Education Committee 
          at the request of the author. 

          AB 1991 (Arambula) from 2010, which failed passage in the 
          Assembly Education Committee, would have required charter school 
          petitions to be granted for five years; authorized charter 
          school renewals to be granted for five to ten years; established 
          an alternative renewal process for charter schools identified as 
          persistently lowest achieving and schools that do not meet 
          specified academic criteria; authorized the Superintendent of 








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          Public Instruction (SPI) to establish alternative academic 
          accountability standards for charter schools; and, combined the 
          renewal appeals process with the revocation appeals process.  

           REGISTERED SUPPORT / OPPOSITION  :

           Support  

          Superintendent of Public Instruction Tom Torlakson (Sponsor)
          San Francisco Unified School District
           
            Opposition 
           
          California Parents for Public Virtual Education
          Charter School Capital
          Delta Managed Solutions, Inc.
          EdVoice
          K-12, Inc.
          School for Integrated Academics and Technologies (SIATech)
          Many individuals


           Analysis Prepared by  :    Chelsea Kelley / ED. / (916) 319-2087